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Nikkei Markets

Hong Kong shares deepen losses as coronavirus cases rise

Smartphone parts makers among top losers as all Hang Seng constituents fall

HONG KONG (Nikkei Markets) -- Hong Kong shares fell to a fresh seven-week low on Thursday after China reported another spike in confirmed cases of a novel coronavirus and a higher death toll.

The Hang Seng Index lost 2.6% to 26,449.13, extending a 2.8% slide from Wednesday to close at its lowest level since Dec. 10. Smartphone component suppliers Sunny Optical Technology Group and AAC Technologies Holdings shed 7.4% and 7.5%, respectively, amid worries over supply-chain disruptions due to the virus outbreak. The two stocks led losses on the index in percentage terms. All 50 components on the gauge ended lower for a second consecutive day.

Meanwhile, Macao casino operators Galaxy Entertainment Group and Sands China extended recent losses to fall 2.5% and 4.1%, respectively. Sands China on Thursday reported a 10.3% increase in fourth-quarter net income even as revenue edged 0.4% lower.

Risk sentiment remained jittery as fears around the spread of the virus threaten to stall economic activity in and around China. Chinese authorities on Thursday said the death toll from the outbreak rose by 37 to 169, with the total number of confirmed cases rising by 1,032 to more than 7,000. The World Health Organization has scheduled a meeting to assess whether the outbreak warrants being called a global health emergency. Last week, the WHO said the virus is an emergency in China, but did not declare it a public health emergency of international concern.

The Hang Seng Index is down 5.4% so far this week, on course for a second weekly loss.

Kimmy Tong, research director at Anli Securities, expects the gauge to only reach a bottom when the WHO designates the virus as a global health emergency.

Markets in the mainland remain closed for the Lunar New Year break, which has been extended until Monday. The yuan traded offshore fell 0.4% against the dollar to 6.9970.

Meanwhile, the People's Bank of China has said it will inject into the market liquidity through its monetary policy tools when markets reopen.

"Investors are watching to see what measures China will announce to try and cushion the impact on the economy," said Andrew Sullivan, director at Pearl Bridge Partners. "Reserve requirement ratio cuts, liquidity injections and more fiscal spending expected, but the question is how will it be targeted?"

China NT Pharma Group jumped 13.8% in Hong Kong. The company on Wednesday cited a local news report as saying that its unit's drug Ambroxol, an airway lubricant, has the potential to be used as a treatment for the coronavirus.

Extrawell Pharmaceutical Holdings surged 132.4%. The reason for the surge was not immediately clear.

Alvin Ngan, an analyst Zhongtai International Securities, said gains were likely on speculation. "We need to remember that the drugs mentioned have not passed clinical trials and will not be up for sale in the short term."

Ascletis Pharma tumbled 16.1% after surging 33.2% on Wednesday. The biotechnology company on Wednesday clarified that its Ritonavir, an antiviral protease inhibitor used to treat HIV-1 infections, and ASC09 fixed-dose combination, a combination of two antiviral protease inhibitors used to treat HIV-1, have not yet been approved for the treatment of the Wuhan coronavirus.

Chinese restaurant operator Jiumaojiu International Holdings fell 6.2% after saying it was suspending operations at all its restaurants until Feb. 9 to ensure the health and safety of its employees and customers during the virus outbreak in China.

Shares of airlines remained under pressure as carriers across the world cut more flights to China. Air China declined 1.2%, while China Southern Airlines slid 3.3%. China Southern controls 30% of Wuhan's seat capacity, and routes to and from the city account for 3.6% of its seats, according to Bloomberg Intelligence.

-- Benny Kung

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